Frost & Sullivan: New Challenges Will Be Survival Test for Suppliers in World Commercial Aerospace Materials Market
SAN ANTONIO --- The world commercial aerospace material markets are undergoing a period of transition as another aerospace construction cycle (1999-2000) begins to wind down. Companies must address new challenges in order to survive in a market forecast to grow at a 6.4 percent compound annual growth rate (CAGR). Frost & Sullivan's World Aerospace Materials Markets reports that world markets generated $1.56 billion in revenues in 1998, increasing 6.3 percent over 1997. This increase was largely due to the healthy U.S. economy, increased international passenger traffic and continuing demand for aircraft, as airlines upgrade aging fleets. As with many related markets, the commercial aerospace materials market is undergoing a process of vertical integration. The consolidation of aerospace material supply and aircraft construction by major aerospace companies has led to increased pressure on smaller suppliers, forcing some out of the market. An increase in aerospace mergers has also led to a reduction in the number of contracts issued to suppliers. "The growing acceptance of composites by aircraft manufacturers has led to a slow reduction in the use of traditional construction materials, such as steel and aluminum, despite reduced prices for these materials in world markets,'' says Frost & Sullivan analyst Ron Stearns. Proposed new aircraft designs that incorporate composites signify steady progress that will affect the steel and aluminum markets by the end of the forecast period. Such improvements will force providers of aerospace steel and aluminum to innovate more competitive materials that demonstrate the durability, strength, flexibility and corrosion-resistance of composites. Although companies are increasingly moving toward the use of composites, cost still remains as the foremost issue in the decision making phase. One of the main factors affecting the growth of composites in the markets is the cost per pound -- which averages $50 -- as opposed to $5 for steel and $7 for aluminum in the aggregate. Reduced prices for steel, aluminum and titanium from China, Japan and Russia have put downward pressure on costs in North America, and slowed price movement for commercial aerospace materials, toward a single world price. This has effectively led to a decrease in North American aerospace material prices. World Aerospace Material Markets provides a comprehensive look at the three dominant materials in commercial aircraft construction and how they affect each other with regard to revenue, percentage use on aircraft and percentage of market share. This aerospace industry research has integrated the Market Engineering consulting philosophy into the entire research process. Critical phases of this research included: Identification of industry challenges, market engineering measurements, strategic recommendations, planning and market monitoring. All of the vital elements of this system help the market participants navigate successfully through the aerospace market. Frost & Sullivan presents Market Engineering Awards to companies working to make positive contributions to the aerospace and defense industry. The 1998 Market Engineering Leadership Award has been presented to Applied Aerospace Structures Corporation. The 1999 Market Engineering Vertical Integration Award has been given to Hexcel. The 1999 Market Engineering Competitive Strategy Award goes to Wyman Gordon. Frost & Sullivan, an international market consulting company, monitors the aerospace industry for market trends, measurements and strategies. This ongoing research is utilized to update a series of online research such as 7070-22, World Aerospace Material Markets, and to support industry participants with customized consulting needs.
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Frost & Sullivan: New Challenges Will Be Survival Test for Suppliers in World Commercial Aerospace Materials Market
